Smart agents build brains into Net ads

Intelligent agents--automated software capable of learning a user's preferences and searching out information--have long been associated with search engines and shopping services. But now, agent software is making advertising on the Internet more targeted and effective.

Firefly, an experimental entertainment site from MIT Media Lab spinoff Agents Inc., and Entertainment Connection, an entertainment shopping service opening April 22, both use intelligent agents to personalize the Web experience. And both claim banner ads will never be the same.

REVOLUTIONIZING WEB ADS

"Our goal is to establish a new model for advertising on the Web," said Doug Weaver, VP-advertising sales at Agents Inc., Cambridge, Mass., which has amassed 70,000 registered users since its launch two months ago.

Firefly makes recommendations about music, movies and books by comparing one user's interests to the interests of his "nearest neighbors," other Firefly users who have similar demographics and interests.

TARGETED BANNER DELIVERY

Firefly's ad strategy is built on the agent model. Advertisers can have certain banners delivered to some target audiences, while other banners are served up to other users. An ad will appear only when someone with the appropriate demographics and entertainment preferences uses the service.

Marketers including AT&T and Duracell have bought space on Firefly. Rate card is 10¢ per impression.

"On a conceptual basis, targeting psychographics is an awesome thing to do," said John Nardone, director of media and research services at Modem Media, Westport, Conn., interactive agency for AT&T.

CUSTOMIZED CHARACTER

Entertainment Connection, based in New York and Chestnut Ridge, N.Y., is positioning itself more as a shopping service than a community. At launch, the service will offer 250,000 units of music, video and merchandise for sale to registered users.

The company's hook is an animated character called "Amu," which customizes the service for users and offers suggestions. Amu's appearance changes depending on what area of the site it's in: Rock music fans might see a leather-clad Amu, while classical fans would see a more restrained character.

Amu is key to Entertainment Connection's ad strategy. While the site will take banner ads, all the ads will be demographically targeted. Additionally, the company hopes to deploy Amu as a spokescharacter that would deliver a pitch for a new album or tickets to a show.

An untargeted banner "would be a waste inside our site," said Evan Cagner, director of development.

The company is just starting to talk to advertisers including ticket brokers, record labels and liquor companies. Pricing hasn't been set yet but will likely remain flexible.

PRIVACY STILL AN ISSUE

Despite the advantages to such targeting, agency interactive experts caution that marketers should beware of the drawbacks.

Chief among them is the Big Brother factor: consumers' fear of a machine knowing too much information about them.

"When we use things like this, we need to have clear privacy guidelines in place," said John Houston, chief technology officer at Modem.

Agents also leave little to chance, presenting only information and ad banners that match previously set characteristics.

"There needs to be an element of serendipity"--the recognition that consumer buying patterns can be influenced by more than past preferences--said Chris McCarthy, senior producer at Ogilvy & Mather Interactive, New York.

It's also conceivable that any site that registers its users and carefully tracks their path through the site can do the same kind of targeted advertising without deploying agent software.

For now, though, intelligent agents are making Web advertising more efficient.

"We are giving users total flexibility in the information they receive," Mr. Cagner said.